4: Information for Marketing
This chapter covers "intelligence": the tasks of gathering and analyzing information that will be used to drive marketing decisions. It's accepted that the more information a manager has to make a decision, the greater the chance that the decision will be sound - but marketing is much "softer" than other business functions, such as accounting, as it deals with motivation and behavior, which are difficult to pin down.
At yet, marketing information often the driver for business decisions, particularly projections of revenue based on the aggregate behavior of the buyers. Plans are managed according to the anticipated return, and operations managed based on an anticipated volume of sales, and as businesses become more information-driven, the accuracy of marketing predictions is of increasing importance.
Marketing Information System
The marketing information system is a set of methods and procedures that collect, analyze, and present marketing data. "Information Systems" is often used to refer to computers and networks, but the author uses the term in a neutral context (it can be paper and pencil, but the data and equations are the same).
Data sources include:
- Primary data from marketing research activities
- Secondary Data acquired from published sources, trade associations, and research firms
- Internal data pertaining to sales and costs (typically historical, but possibly projected)
These data are subjected to various techniques and procedures to render meaningful information based on the data collected.
The author mentions data sufficiency and saturation, in that having too much information (or too granular information) is confounding and can be as detrimental as having too little
Marketing Databases
Because data gathered can be overwhelming, most marketers turn to computer technology to aggregate and analyze data. This is especially true of the online medium, in which each click of the user's mouse generates data about their buying behavior that can be meaningful in making marketing decisions.
Data is often collected about current customers and potential customers over long periods of time to arrive at meaningful information about current behavior and trends that can be predictive of future behavior. The author doesn't go into much detail except to indicate that data analysis involves "sophisticated statistical techniques" (EN: which I take to mean correlative and regression analyses, primarily).
There's also a brief mention of data consolidation, especially cross-channel: coordinating in-store purchases, catalog purchases, and Web site purchases gives the marketer a better overall sense of his market's behavior across-the-board, in addition to noting channel-specific patterns of behavior.
Marketing Research
Marketing research is conducted to fill the gaps in secondary research: when there has been no study into a phenomenon, or when the study is not specific enough to be suitable, companies conduct research to obtain the data they need to make decisions. The research may examine the behavior or attitudes of existing or prospective customers.
A differentiation is made between basic research (purely for intellectual or academic purposes) and applied research (done with a specific purpose in mind), and the author indicates that most marketing research is of the latter category.
Generally, research begins with an exploratory phase that poses general questions in an attempt to discover the possible causes of a problem or phenomenon. An example is given of a company that experienced a 15% drop in market share and wanted to know the reason. Exploratory research attempts to discover the factors that might have had this effect, then conclusive research is done to test hypotheses to determine which of these factors has a causal relationship.
The author lists four common methods of conducting research:
- Observation - The researcher observes phenomena, whether directly or mechanically, whether in the "real world" or a laboratory environment, and collects relevant data for analysis.
- Experimentation - The researcher creates a controlled situation that permits the alteration of specific variables (most often in a lab, but sometimes in the wild) to determine differences in behavior when these variables are altered.
- Simulation - The researcher creates a model or prototype that is intended to represent a real-world phenomenon and introduces it to a controlled sample to determine what the possible outcome might be.
- Survey - The researcher gathers information from test subjects, which may be done verbally (as in a focus group or verbal survey) or through a paper or online form, to obtain information that is not readily observable. Surveys are the most versatile and often-used method of market research, so the author provides a sidebar with additional information (EN: I'm skipping it - it's very superficial)
There is an aside about international market research, specifically the difficult of it given the logistical problems and strong cultural differences. The author mentions a couple of blunders to underscore some basic advice: research is important even in foreign markets, don't assume what works in one country works in another, and consider hiring a consultant who's familiar with the landscape. (EN: this is good advice not only for geographic market segments, but for any market segment.)
Sales Forecasting
Sales forecasts are one of the most demanded and delicate prediction marketing is expected to provide, as the future revenue of a company is a topic of particular interest, and because sales figures are critical to organizational planning.
In essence, a sales forecast is a forward projection based on previous experience - i.e., the past years' figures provide a starting point and are adjusted by recent trends, but additional questions are considered, such as:
- What trends are affecting the industry as a whole?
- What activities are planned that may cause atypical fluctuations? (Introducing a new product, a major sales campaign, etc.)
- What are our customers' buying plans? (Particularly for B2B sales where customers can be asked)
- What environmental factors may have an influence? (Economic conditions, political tensions, or even a weather forecast)
Forecasting is done for a company as a whole, but when the firm has multiple product lines or operations, a forecast may be done for each product and amalgamated into a whole.
Also, forecasting is generally an ongoing process. While companies generally have a planning year and are acutely concerned with the next year's figures, there is an ongoing need for the information to be kept current on a quarterly, weekly, or monthly basis, and budgets may be projected for ten years or more into the future.
The Manager and Marketing Information
Aside of sales forecasts, marketing information can be useful in providing predictive models that can help provide evidence or estimations for decisions. Research is used to drive a variety of decisions, such as whether to drop a product line, open a new retail location, change an ingredient, etc.
And, or course, market research is instrumental in making meaningful marketing decisions: determining the actions the company can take in advertising and promotion to stimulate sale of product, improve the perception of the company and its brands, etc.
There is the caveat that all research is flawed, and there are various factors (research design, sampling method, analysis techniques, etc.) that can result in inaccurate information - so while it's generally accepted that data from research can reduce the uncertainty of a decision, it cannot make a perfect prediction.